“We are doing well, but not like last year,” said Claudia Isabel Ramos Flores, general manager of leading apparel chamber Cámara Nacional de la Industria del Vestido. “We expected the first semester would be good, but it’s turning out to not be so great.”

Ramos forecast the industry will grow 5 percent this year to $7.2 billion, down from a 7 percent hike in 2010 when exports rose 40 percent and local demand remained strong. Observers forecast industry exports will rise 20 percent in 2011, while domestic sales will decline 5 percent as consumers tighten their belts in a cooling Mexican economy.

The industry is also bracing for an increase in Chinese imports later this year when the government is expected to cut import duties to 30 percent from 80 percent as part of trade negotiations with the Asian country. Ramos said the sector is scrambling to convince the state to modify the plan to shield it from an escalation of Chinese imports next year, which will negatively impact its fortunes.

“We need to convince our government that opening this new window of opportunity to China could threaten the survival of many Mexican companies,” Ramos Flores cautioned.

Meanwhile, the industry continues to find ways to crack down on a booming contraband and counterfeits. It has launched a new anticontraband scheme dubbed Zero Tolerance to continue to pressure the state to toughen customs and chase illegal importers that smuggle billions of fake and undervalued apparel into the country.

To further boost its competitiveness, the industry has launched an international promotion campaign called Mexico Fits to lure U.S. brands to manufacture in the country.

Mexican trade-promotion agency ProMéxico will support Mexico Fits by financing the country’s stand at this year’s MAGIC Show, featuring about 10 textile and apparel producers. ProMéxico is also looking to support the industry’s efforts to bolster exports to South America, mainly Colombia, Peru, Central America, Argentina and Chile, where it sees the greatest growth opportunities, according to an official.

Some observers said ProMéxico and the industry itself could be doing a better job of promoting Mexican apparel and fighting contraband.

Miguel Angel Andreu, director of the Mexican Textiles Institute, an industry think tank, said ProMéxico does a “poor job” at training its international staff to find buyers for Mexican textiles and that there is “little follow up against incompetence.”

Therefore, the industry must set up its own promotional body and rely less on ProMéxico, he added.